BZUN - Earnings call transcript Q4 2020

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Operator

Good morning, ladies and gentlemen. Thank you for standing by for Baozun's Fourth Quarter and Full Year 2020 Earnings Conference Call. At this time, all participants are in listen-only mode. After management's prepared remarks, there will be a question-and-answer session.

As a remainder, today's conference call is being recorded I will now turn the meeting over to your host for today's call, Ms. Director Relations Investor Sun, of Baozun. Wendy Wendy. proceed, Please

Wendy Sun

you Thank today. us thank you, Hello, everyone, operator. for joining and

Our and our earlier services. today ir.baozun.com, fourth was well and release quarter as is full year available on on as IR at earnings website GlobeNewswire XXXX distributed

can Webcast presentation accompanies and today a Presentations. our sections of PowerPoint website our IR at find Quarterly also comments You that on Results and

Financial Qiu, the review the all business Officer; highlights during call On the Mr. operations Ms. Qiu financials Arthur questions They your Baozun Chairman and Yu, Vincent discuss who will and from and Q&A answer Mr. Mr. guidance. Mr. Chief company will session by today follows. our to the available Yu, be followed Li, have Chief that and Tracy President. BD Officer; Executive we Vice will

to update forward-looking law. materially and The any to SEC company's Exchange the the and required Further the the these Before the would company's we Act U.S. of XXXX documents cause control, the included conference company regarding Litigation Private statement, you call the that Securities Securities forward-looking which management's from of events current to and and Limited. uncertainties risks, conditions remind except of published and Exchange market this operating to other Kong meaning forward-looking expectations factors, those statements announcements, risks, in statements on are current differ Act any of and XXXX. or of and Those other as to may the Stock within with U.S. relates and all actual results company's which statements. difficult upon or many the information undertake begin, other involve contains like the the factors does and uncertainties are filing obligation in known that not of of beyond notices which I Reform forward-looking is based unknown Hong predict and applicable are website

please It that Vincent, unless stated, all Chief introduce otherwise in during please RMB. now figures Qiu. is pleasure Mr. and ahead. note go to mentioned are Vincent Officer, Chairman Finally, my Executive this call our

Vincent Qiu

Wendy, you, quarter now report pleased of busy results. I'm being for a another thank It's us. joining exciting Thank and solid and to and all set you

During China. rapid their the The partners across fourth quarter, accelerated transformation consumption digital rapidly. response brand online is of landscape e-commerce in evolving in nature to the changes

unique of our positioning that evolution, brands Our of the a at ahead this puts technology as the brand for with partners curve. platform keep to us of center leader solution-driven us enable

results the brand are We XX%. margin net and I'll on number while non-GAAP Overall, achievements If like our XX technology our with strong high-quality along with presentation, you these the you following our operating start would infrastructure. the partners six fourth throughout demonstrate a acquisition brand profit add in momentum believe by to executed strategies increased We with record-breaking cumulative our XX% few a investments quarter. XXX and reach of reflect by key of net enhancement. campaign, highlights income share slide the non-GAAP effectiveness strategy continuous long-term two. growth including a to on Double grew our of operating in We

solid enhance Empowered Double effective campaign three. that breakthroughs to been efficient become Now long customer XX-day creating XX efficiency. such continuous by innovation, improve moving the on we validating slide have able operational have put achieve a number and infrastructure. has touchstone, and to and we into XXXX's efforts technology experience

support the search. upgraded per During technology and orders system dynamic five to order a we expanded our quarter, to million capacity record-breaking hour

we the our Deployment drive partners rates. customers AI consumer By Retail help automation of and their exposure of data-driven leveraging and Operation From with a data we deployment and and in-store streaming targeting live square Baozun analytical creative positioning commercial efficiency, operational us marketing live launched insights. from operations intelligent integrate system streaming while and us labeling, perspective, kit, established improves sales a virtual tools or meter live This fourth precise and enables solutions. on intelligence algorithms insights SKU into through video digital effectively to streaming more processing engage to short reducing innovative we that that the risk. them engagements a and allows analytics, understand streamline one-click quarter, X,XXX infrastructure, focused proprietary applications big we portfolio ROSS. dashboard of including and better studio of launched tool to daily variety brand cloud addition, price our In and Support rollout, a System

instant opportunities brand side efforts logistics procurement double in hours, arrival within us for brand proposition to value real-time to our partners efficiency. us efforts our not big cover enhanced these data greatly extend deliver which and experience. peaks allows equipment, enhanced customer and to launch monitoring All order XX% several Double We to we points over for XX for greatly during them consumers packages that services of return our omnichannel extended optimize capacity XX of year's partners enables used capture the touch strategies. warehouse All emerging the and allowing these the also On to process. upgraded only this algorithms but flow improved entire order campaign, to across

way service to our a universal third-party us resources strategy. infrastructure optimal an As online allocate and the tech a based allow in on provider, assets

e-commerce reinforce reiterate the a to achieve ahead To empowers we X-year capitalize look launching sustainable medium-term are -- strategy proposition. solution we plan on strategic of slide brand objective our delivering technology value we X, we success. opportunities vision As future a of, And profitable number X-year our partners, continue our our to growth. will to on customer-centric to and

approach partners' differentiation First, service brand needs. growth drive meet to we will First focusing by adopt Customer to a diverse on

new in in brand more increase existing partners. service we business are segmentation -- industry, the leader of we our to We there are one for number strategies believe opportunities have explore implement Though subcategories from us to we and will to brand and business e-commerce new a lot China's been potential share. become both market opportunities customer attract market

drive through -- business there we channels. Tencent new evolves, believe will with models increasing as Douyin continue business China expansion. the the as JD will to We channels new are in such and e-commerce we In to meantime, mini-programs, explore drive through opportunities growth in accordance new Secondly, explore the new platforms. that

technology-driven even seek business cost of will structure location re-engineering we Thirdly, process, through strategy. optimization service-quality-oriented and greater our

the initial XXXX. which improve costs will we recently As half remote and service we Huaibei, of two search second additional Nantong of our in believe and reduce step, from cities established low-cost centers quality

our honored number demonstrated throughout greatest of people through Baozun and was key what assets. clear abundantly by X, XX. and slide I'm that on was culture is been people. Lastly developing our again proud awarded quality the based team Top the the once on This XXXX Employers our delivering commitment resilience, to of and are belief to Best have agility the Shanghai

our planned Thank call to team, will leading-edge over I'm the innovation. new over major a XXXX and office campus to of believe half talent meters. future new move announce Here of over financials. nurture will the Baozun second you. will culture Baozun for go excited our the pass I We to now expansion accommodate with XX,XXX a growing Arthur, brand who square the headquarters business support

Arthur Yu

will about the for you financial QX in year priorities Vincent. everyone. Okay. joining talk Thank in today. Hello in earnings our you, our call XXXX performance fact full XXXX. Thank and our I and

deck. increased prepared XX.X% slide Let presentation X increased XX.X by is across X.X which XX.X% me billion. discount We with our largest RMB GMV XX saw in GMV which billion. RMB duration total by XXXX a marketing XXXX to campaign involves on marketplaces. RMB and fourth start since in Breaking longest emergence number COVID our XX% this XX.X quarter and the Double down, the non-distribution Overall, distribution with to our this billion deeper growth activities the financial across multiple to impressive categories results, rose the and quarter, of GMV the

post higher promotion period. fourth observed result XX also rate of have expanded days We XX, this as return a the a quarter Double

rates well return the quarter and that some these believe Although, the to between XX Double discrepancies value, across higher we we board. led this managed on the GMV fourth have

right limited slide. discount Breaking profitability at to the side near-term expense growth. as impact brand the of We strengthen and and the outweigh see brand by faster it you model our we distribution on image brands believe category, strategically with protect service relationships certain of also We growth. partners in the the our longer-term which on can benefit will expanded down

During the FMCG and categories. the see momentum quarter. apparel an to in quarter, we has sportswear, modest outstanding The luxury category growth continued

of clothing our which includes sportswear, luxury the men's know over category, you contributes and GMV. total XX% As apparel women's and

despite XX% throughout year. about well rate saw of a growth GMV a we the optimization with XX% nearly increase the quarter, growth on our and XX% the of contributed Electronics the growth. of impact showed low sector year-on-year smartphone represents which a year-over-year, total double-digit XX% of had base. GMV over major as total FMCG During

strategy this the of rate, distribution profit one proactively promotional adjusted have sales growth improving In key discounts we we XXXX. but trend for a appliance and the our care the quarter sustaining addition, personal seen categories because of quarter model had in one negative

number to slide Now moving X. on

and by within services in growth revenue growth by GMV which XX% increased in RMB revenue billion XX.X% revenue X.X service to X.XX Our revenue increased RMB net sales by translated X.X to billion. Total to substantial particularly increased billion revenue. into RMB XX.X% product

XX.X% With during to attained products declined sales X.X to Double last cost RMB billion year. to discounting the gross category mainly RMB XX mix. sales initiatives from the increased product period the increase due Product and in billion in of revenue, margin X.X

year. in blended broadly gross line XX% margin was last with Our

RMB X. RMBXXX expenses Now from XXX year. move to slide increased to on business growth, the with fulfillment million Along million last number

as period helped percentage efficiency the last by offset in million GMV improved Double Sales and from fulfillment year. increase to marketing by million hourly XXX increased a related program expanded the labor RMB this year. expense an to our of to expenses RMB XXX XX X.X%, and Our rate

due expense X.X% control, of effective RMB an of our initiatives. cost marketing was last our latest services million. due of RMB ago, million talent offset mainly to as our effective efficiency percentage improved slightly productivity XX cost year. a and million was in of pipeline. due from and technology GMV, X.X% This more GMV a digital improvements and procurement X.X%. X.X% to sales acquisition the Most to infrastructure improvement control this by development and This prioritization better RMB gain in was increased deploying data and expense was to ratio XXX effectiveness G&A investments of XX our operation. As from and were expenses year a improvement from from the content to marketing Technology percentage mainly to and

X.X%, to trend X.X% the As a GMV, improved of we economies our while to G&A greater -- from reflected scale of a grow ratio which continued percentage expenses improved business. of

interest on a move All-in-all, XXX year. RMB Now XX%. was net quarter. down XX. short-term RMB mainly X%, On our by while Operating borrowing income paying RMBX.X XX%. from from income, during offset increased non-GAAP to majority from non-GAAP by expense the basis, to interest operating income increased narrowed driven year-over-year to fourth operations of slide last increased To million is operations margin the This XX.X% XXX million off by margin up number XX.X% the million.

respectively. by and Baozun XX% slide profit, are increase slide growth to and RMB EP cash XX% XX.X% XX. RMB a non-GAAP in XX.X%. year only we increase with were X.XX totaled of attributable now XXXX flow. very deliver and a able results. financial of XX% revenue Overall, our income operating X.XX growth of diluted positive second to non-operating shareholders Not grew free were but on high-quality year number pleased XX. an and remarkable and RMB number and in million, to we Non-GAAP achieved XXX a move Basic ADS to also respectively, ordinary Now net I'll which in resulting was we consecutive net

a billion Hong after sustainable XXst, December and secondary Kong us of RMB XXXX, profitable This investment to in foundation our future account had we a growth. listing. bank solid cash, cash short-term X in As pursue gives successful our equivalent and

ahead Looking into XXXX.

strategic just in focusing plan Vincent earlier, will we customer on our enhance As to new value proposition drive first to our growth. outlined by continue

opportunities. M&A our We of will you have through year. announcement this seen believe, do alternately many this both organically and recent I

mini-programs value to to capabilities, in One ecosystem. our proposition our further was of this Tencent strengthen expand

well tangible quarter emerging opportunity see of to glad expect sector. luxury deals say, financial to starting Another second is the capture is and I'm results in we of integration one track XXXX. the in both on the to

model continuing time. accomplished such are that progress the We annualized new first GMV Jingdong, of basis surpassed for over our also iterations XX% worth opportunities for XX% Douyin XXXX mentioning for and our business non-baozun.com on an and in strengthening time non-Tmall GMV which omni-channel channels through total the DBO making to also It's in capabilities in explore as initiatives. first

While by generating investments, results these profitable encouraging. there a might be balance are growth. high initial by and believe confident are opening top generating line we strike sustainable will we And sufficient some we the –

prepared In through for in and our are time. shareholders. we like initiatives. program to comprehensive And in initiating technology governance process Thank a we addition, at sustainability efficiency improve business costs to our transform very serve long-term and this of we long-term this service company continue believe reengineering value cost but least, And not our improving growth our enhance terms by last quality aspect the remarks. concludes order same the how much. to partners our social We will environmental, you brand base of optimize our will and reducing ESG to create

are you session. ready to the begin operator, now Q&A Now

Operator

Certainly. begin line now Wong go question-and-answer HSBC. of we [Operator Binnie session. from ahead. Please from gentlemen, question We the Ladies and the first the will have Instructions]

Binnie Wong

for you Thank my here. management. questions taking evening, Good Hi.

expect is think that our this you structural like post And something a is do guess, close and long-term that should almost margin about forward So margin. think I to earlier, we we And target then will total. this – to we congratulation to right? on the rise we better of then that COVID XXXX a talked And set the of any raising of set talk quarter, go historical a think And should is here? can good also contribution improvement – on strong question That meaningful contribution set you here also – XX% a non-Tmall see XXXX? So wrapping then guess solid channel actually that's on that, about drivers rising. with from the right? about I raising that we especially high expect see the a up also second was very – higher encouraging side, margin that results you

it of you some for you And what us our so allocated? maybe can if much. allocated? just – understanding? How in mini-program understand stores? Is some XX% are brands' they into is to that how help we Thank so sense in Just that terms XX% flagship get or to

Arthur Yu

I margin first Yeah. Binnie, in the Okay. some comments, and to pass Thank on take you, I will will for XXXX, make one second about Vincent then and the the question.

into So in terms and brands. different of of the margin in XXXX, we our made our technology investment our optimization

We have a the on seen XXXX into marketing. our outlook strong

XXXX. the several So sectors, now are good have luxury, and growth like our there margin seen the investment. are compared we want which in At with in area. in has efficiency of I benefit to year factors. our a that of innovation, add overall a drive, and the the we enhance strong secondly, drivers to very a and categories some One profitability technology other is now seen time, we through, seeing margin the XXXX enjoy comment. by just And some great another our coming and like the really is, same

also As in just to channels actually line three models, growth the we're new XXXX investments years. believe, we us mentioned, we which investments, lead into to will will into in but early expect higher this five new to and making investment see we top some next business

for the margins. So, that's my outlook

Vincent Qiu

I'm Binnie, question. Okay. here second your for

quickly. is see trend think very trend different multiple realizing because or of a I clear year, year is last quite channel we quite omni-channel, this

this first JD, store, XX%, of So more GMV. the are growing like -- we channel XX% than channels said, it's non-Tmall the as and of time first that total mini-program the as you Inside that official several seeing apparently. like a web contributes we the time quite it's all

domain initiative exchange I private of now their as Mini-Program private a will the interesting this, lot channels more or so-called new a domain that take take even is of Douyin detailed distribution can private for domain. and -- on of a this the later brands of the but as I several So, the lot like on. -- think dot-com yes, And brands views that thing we think,

there So, the from the and I trace channels channels. be resources think more will transaction-based differently major

looking So of Binnie. you, going to happen I dynamics for Thank forward, a there channels. private the year, will lot think this think non-traditional I domain be in or

Binnie Wong

you. thank Well, And have the Vincent, you by thank I a way, on for quick just follow-up clarifying. comment. your

now say, of we platforms. service solutions that you'd the also some Because, more, a of So because to even all what should video the like don't they percent they a that it they more third short but channels, more more you think and there's to and the of how because expertise, multiple across demand, rely your that, mean brands Baozun, -- Does right? don't expertise have have allocate leverage party even structurally, know, more higher actually channels. channels know use right, mentioned will

more comment? is Baozun the diversified e-commerce the Is for longer-term So that actually benefit fair growth. worked a towards an channel

Vincent Qiu

you for Yes, the for question. follow-up your Thank Thank follow-up sure. you questions.

think strong of established has part solid to foundation a do brand for transactional I the traditionally, Baozun e-commerce, online. enable partners to very business the the

it's the for new think I I mostly the the think basically for mid-end same. and the So, channels, back-end,

order thing all service, the customer these experience, of order For customer payment is collection, kind same. example, technology fulfillment, basically processing

infrastructure So to new the in that built past as business and actually, down serving we the cost can the -- just and use leverage up keep all the well.

one. marketing, channel a think I spend they that two new very in dollars channel, the Number new front-end, for for is So, marketing think will for yes, way -- different. the for the I number the that's a be

channels. is strong very digital think more emerging marketing than ago. remember, capability important -- marketing the years you new we now, are capabilities for three did than So in our before. that's And I why, so we We this think the

this platforms. an So, can in the for end-to-end new on we channels Thank and you. brands case, solution deliver new

Binnie Wong

helpful. Thank you. much, Thank very you very

Arthur Yu

Yes. the Vincent's actually, multiple point channels. We're growth. the I'll just organic comments about using only on add a not

We are as using inorganic enhance the way well. our capabilities to

iClick of a end to brand to in way. to iClick we very may – deploy For us also a effective utilizing our capability example, are solution, you the in deliver growth helped front and deal, service remember front the SaaS which mini-program good our partner our end the

are is this capabilities why we So all together. pulling those

Binnie Wong

Okay. Thank Thank you. Vincent. you, Thank you.

Operator

Thank you.

Citigroup. line from the our next Please ahead. Alicia Yap We from question have of go

Alicia Yap

Hi, Thanks quarter. congratulations two solid I have my taking Good the for management. questions. thank call and on you. evening,

recent and is Could new brands help with readiness hear us existing the future The the the onto first one monetization traffic of upside that incremental heard of opportunity to travel even is improvement additions because the brands the related restrictions private that. of to your this terms with in iClick. recently this with the partnership or the management even another Chinese of these from Second frame revenues the the financial we Year platform? all launch e-commerce question or domain New year from

So are Year Chinese stronger seasonality. New actually they usual seeing than a

Baozun usual. that than little fashion a or sure you. electronics also so If Year even bit if that stronger Thank not this similar FMCG? strong elaborate is on the demand So New is demand? on the seeing trend could you Is or

Arthur Yu

the then Chinese on New I Thank Okay. take Year the on And first you. will iClick. may trend. Vincent comment question

Okay. since workshops. started we On acquisition conduct have iClick, several to

be deposition. SaaS the and very strong And have and capability we solution. to integrated partner solution in content of solution a looking of an create very end strong for brand which into are data to front and proposition that our combines What to IT workshop the is is an So companies. both will attractive OIMS looking the the Baozun operation IT

the have us. is And So have which secondly, is opportunity, brand there there – thing has introduced iClick have seen kind and travel another the paper we the did are iClick which already cross-selling [ph] we we a brand already is first introduction to [ph] of to of seen kind doing. which this we currently

in – advertising are create and lead financial tangible are at synergy to are And are for operation because and how we our a now brand advertising very some kind the So to digital into marketing of we soon. historically looking outcome confident looking that better digital will to strong digital And it to partners. our thirdly, area. results create combine we iClick more the very our

of kind through our think purely the to the to So through mini-program financial iClick we deal second reason to say now grow results we this combining is business and things or bigger. original done just mini-program we can done But the category three year. capability will from is all the iClick this deal not purely start see those together, of to the allow this because Baozun's MOU do we to team build quarter

and of are to is iClick. to contribute the Baozun has it's which But difficult say, But program. line top will not for to growth which we this the about to XXXX. So specifically confident split contributed to the iClick

Vincent Qiu

Yes. Okay.

CNY one Second Ms. Li? the is about sales.

Tracy Li

And have enhance the done experience the you can going actually sales And And in see, sales year. CNY you actually the can on the continuing the Thank trends. platform to perception also whole private is think topics. revision we and terms for are of results, this for consumer question. management good sign since regarding trend of membership the major consumer We the see them, improve astonishing the and among a major see the beginning be the also regarding serious we we year. do to domain think you

the to So spending to platform. more the and example platform traffic a e-commerce and to QX, channel friendly from our decrease promotion the to observation journeys, brands see mechanism complexity efforts the synchronize to of create we reduce many doing business to already in environment for service the consumer also searching and the the on to improve partners also to angles

methods longer for and the time. -- think And still plan also also RMPs budget the promotion to of lead why promising And trends to data trending especially whole of these the also investment and on tools. I marketing actually and assets much believe advertising we I from point be also been expand on on the entertainer capabilities So media brands, their the the performance we and all their will to to marketing in consumer the view, think consumer self-owned on paying environment Baozun's also and it the healthy efforts affect our regarding perception been growth. for more and live have of the stream you. opportunities RMPs is have attention on live be topic we Thank and and going more year. short on interacting new video live streaming, streaming production, technologies the That's also

Alicia Yap

you. Thank

Operator

Thank you.

next from go We the Bank of have Please our question line of Joyce Ju America. from ahead.

Joyce Ju

Good my Wendy. question solid outlook. My taking fourth for this evening, thanks And the Vincent, and Congrats Arthur was quarter. year first to question. year's for related full

growth As just the how already our focus? should last like categories. different brand JD. to is like its presence year, discussed like we to for with look the second and market Baozun And there channels is like generally WeChat see we this idea actually growth any will for plan, compared it year? we outlook new and the brands of the from you like you addressable this -- related discuss any with to And like know the you year, expand there like, outlook last which new because to get -- actually mentioned year it's an like We you in speaking, new was or like has know Douyin, areas question want when Baozun plan, see also

will new following expect should big the these market? contribution how How much the idea, channels in quantitative potential Thanks from a actually years? get a to be GMV lot. want we Just

Arthur Yu

Okay.

-- will will Vincent will yes. talk probably and cover question the about I get So to one. I the then I second first

Vincent Qiu

Thank Okay. you the for question. Yeah.

to lot expect. surprises -- surprises look how traffic, to online XXXX For a to of say

view, I also the new official including of things from of initiatives web you domain, expansion this app plans. of firstly brand a think mini-program channel happening some the official kind on private see the and lot their can point TC, source,

the year platforms to So trying think maybe resources on of XXXX lot I the seriously. brand for a to allocate first multiple

lot size like kind about driven of application quite business of will of data-related for a can omnichannel So talking this I also initiatives to and we GMV I there XXXX, case, is the aggregated be important. each think refer CRM new And solutions an think in in platform. the the of is

So I e-commerce a the and now oriented. it's addressable those who that -- channels, marketplace. think brand is the or the brand market But expectation brand's getting e-commerce more generally, for which previously especially more is not right

I is think the So huge. potential

one, the the addressable it's about for So market. second

Arthur Yu

Yes. Yes.

we of market, healthcare strong seen category, terms I it So the into where the terms are will -- the trend partners actually have on hand to very attention i.e. select further their in think in will terms the is we market they health. addressable depend investment one people one in will see it And which also sell on is how their Baozun personal how doesn't omni-channel the customers. we are of because are luxury have -- of omni-channel kind to we we last change some a to And new still And It support products. we share. year matter the in capability. our the the Tmall I and there the from brand or apparel non-Tmall making market which opportunity of COVID-XX after our making grow now This category. further own

to relationship giving some on the to the in opportunities is help in existing that business. brand us GPO further will strengthen new And business which room more with well. So we our grow further the client that will us we of the initiative. are partner partner that the under the some think cooperating ways there as And new be seeing new model finally, business with

our next and that's channels for on on So year. view the opportunities

Vincent Qiu

Thank you. Can we move to the next question?

Wendy Sun

Hello – yes, ahead. go

Operator

Yes.

Please line Next go of ahead. Thomas question Chong. comes from the

Thomas Chong

questions congratulations and my taking a for solid of management on Thanks results. Hi. set

we that is you. about outlook? strategic X-year I ask time think it talk about first Thank translating plan. the to this the we May think into financial I about should how X

Arthur Yu

Okay. Thank question. you for the

to look our forward. some time strategy I into think have we going

sustainable deliver growth. and is profitable a goal to Our

operating time profit Our long-term five the looking overall to we of years' of by in this depending business RMB would period. XXX X the a RMB view like growth market are billion X-year to GMV X- on end is rate, an to and we billion three to make with become at

our is financial our and So outlook. this goal

Operator

next Move Capital. Please next The presenters. to the ahead. from the Tian line question go from of question Hou comes T.H.

Tian Hou

management. Yes. Thank you

saw the -- distribution to the a total I So GMV percentage GMV as decline. continued of

share two So us how of in will that business outlook In your management future? in thoughts terms of composition services with the you think can the models do be distribution and some and those front?

Arthur Yu

Okay. Thank you question. the for

performing of terms model not see can In it's strongly. you distribution the QX, in as actually

personal has softness brand overall our channel this is is channel Tmall one actually QX, online channel better and in due the brand's -- the than is that an in online. So big better appliance other which their overall than XXXX. performing which of off-line to our also channel brand And performance performing Baozun is a

basically, are one-time of so only in is a confident -- terms this drop. we kind performance So of

seen into has trend are high So, is brand help why the hopefully, quickly will already an them and seeing this our higher we recover the so this the it online. rate. the channel also reason the Baozun, recover. discounts due improvement to to And in year, through QX we recovery secondly, And impact Tmall have be to to brand have a return able of and shared we insights

brand for brand in period we model terms the and distribution for image, partner, high something, go the image, because should think actually we the that's for rate, a to a on the volume. go extended didn't order be return the higher the the of discounts the QX, to In due also so of discount, Double as achieve industry in terms down of it's the And we doing. longer-term responsible XX. profit protect brand actually order actually it's to Baozun, We in we because further

hope will is this hopefully, we the recovery. a we year, in trend this only. see So And QX overall, for a QX

Tian Hou

have I much. so you, question. Thank a follow-on

going. keep Okay,

Arthur Yu

Please, please.

Tian Hou

Okay.

So the regarding follow-up omnichannel. question your is

So I more seeking lot and realize, brands a are of channels out beyond Tmall. newer go much fresher

in second And yourself existing existing operators, And JD? channels, guys there terms in channels is of in other your do how any And position Xiaohongshu Thank any? if there you, are operator say that's competitive you other operators? to question. so, over how So advantage the what like in like you. are

Vincent Qiu

-- second Xiaohongshu, the a This because know, channels of partners of just kind not the traditionally they lot operating previously Actually, existing is question. this for you Okay. just emerging Vincent. like Thank you service channel were transaction mentioned But more you the to is e-commerce for TMA are and expenditures that. a and the platform. changing. platform they now they business, are media because or turning right and brand's on also need more not They business

So it's new a one.

how emerging it call new we emerging, it's channels. So

been So investing have but digital but as we channels for years. operating operations, for we others front-end than multiple marketing as three XX also, the e-commerce we for did more than of for in Baozun, And years experiences. new have more the are

on given mean are plus business e-commerce this three tool, we than solid channels. So I fulfillment strong very you. marketing and investments, in brand I think, technology, more the very new digital Thank the any years of of in capability of facilitating emerging

Tian Hou

Vincent. you, my Thank That was question.

Vincent Qiu

Thanks.

Operator

of We Chen have Renaissance. the China from from our line Please ahead. question next go Charlie

Charlie Chen

questions. my Thank you. I Thank question. management for have two you, taking

progress And premium How is understand breakthrough as pipeline. health So the brands, partner as company I that get is the like well luxury company about Jet exploring into that brands, first. does premium in opportunities particular, first take will in is the segment? has the brand brand that there? the look we like all any the signal one the especially, categories how to food? the of helping Full been First initial

Vincent Qiu

pipeline Tmall the the the but like for private very our is think in I traditional including company Right pipeline not partners is demand be lot. different -- in is can categories. opportunity will domain I'll bringing to your We -- for I also capable I also your now channels a Okay. more question. only answer see is the brand more say that growing first here the new strong.

more, I that getting luxury different for like fashion, like how different say, are more premium rich more platforms think to And and items. So you're cosmetics, we think and like for categories, very the promising. or pipeline more categories

we So are to that. happy see

Jet, they talking and brands. to Full think experienced global For I are in premium very brands

them only with with the the team. to work working but brands are closely we global premium of the team not So local also

think the I better a So go ahead can positioning with integrated to Thank a in work this second you. we and brand. one. potential form Please case with strategies

Charlie Chen

more changes the question sure. brand of I My mean is a level, you. Thank in in Sure, high strategy Internet. partners second

on difficult the COVID. we year understand of was full last impact pretty year As year

on marketing difference versus would private us your between So can new Can traffic you after the with you great. how the give more share the differently? et us company dollars users, you. understand that their how -- full you get the private Are they details year cetera. now about their recognize or how any I activities does maintain talked pre-COVID? be spend that do details Thank to domain more they using the or other domain

Vincent Qiu

think It influence digital the a marketing Okay. year COVID very changes. it year, the and is strategies. to e-commerce special the I or brand Yeah, last has profound

the right I of brands. the has strategy now most e-commerce been of of think consumer the center or digitalization

they and initiatives. also more their initiatives e-commerce resources So and digital their marketing on in position pulling more enhance are to DTC

invest is So strategy I for the the one brand that only short-term. the the that key for center means of think at will that this long-term not

short-term sales for its discounting promotion. channel So is

more talent. it's about It's more about long-term capability system. For and

So in the of we working partnership. this case, with comfortable longer term the for plan quite are

Arthur Yu

just And the have explore -- this, a different the add to on we start partners brand channels. Yeah. to comment different seen

the partners have major which good one that Douyin in And example talking held brand show, channels. one and partner us -- we soft some really to for our partner some brand this QX major more different QX seen live to soft year, do of we So video about -- results. of achieved

Charlie Chen

all That’s Right. Thank much. you. you my Thank questions. very

Vincent Qiu

Thank you.

Operator

Thank you.

from question line Ashley ahead. the next of from We Credit Please the have Xu Suisse. go

Ashley Xu

that service the actually we past than Tmall. mini-program, on the lower on is the take seen fee effective have So rate in model because

difference in the compared Just structural it's development if opportunity whether is Thank we to look Tmall? or long-term, you. just want to platforms, these at to stage? to due two understand we different monetization mini-program on And this similar attributed see do

Vincent Qiu

mini-program the for of lot e-commerce. There's happening a Thanks for discussions Okay. question.

solid right brands. on But different stores years for brands mini-program. the I to a open programming ago, existing three tens to of very think serve team we have formed mini from now we working already have

are we traditional It more transactions. for more it's the they on So a -- Tmall.com. of quite more potential different the lot I data-driven mini-program, Talking platforms from is different of like ones, structure think about marketing-driven that. think and there's especially

not is ecosystem. the So it's platform, -- it's on a not private so commission the example, -- if platform. for a or not for It's even the there's there actually separated by domains

So traditional easier because, platforms. is in it important. space, it's this there is a e-commerce social the case than doing commerce for the And so transactions quite

as processing the front-end think, fulfilment maybe a in But think platform. -- not things of back-end same. the the the the order other I and I yes, case, as to the -- it's Baozun, this middle-end is done lot So fulfilment, a traditional be for order like

value So the I part, model be and the in this think this will structure profit the in case, chain cost same.

For comprehensive, charge think than more is a case, long-term the but the form you. very healthy before, front-end easier marketing brand transactions so model in is Thank I we for can this up partners.

Operator

The of next go question ahead. CICC. Please Feitong comes from the from Zhang line

Feitong Zhang

was portfolio we addition partners the quarter quarter. five the for are brand We in Thanks in to management. fourth net taking fourth our of Hi brand my We saw six. know the adjusting questions.

is color many fourth Thank very acquired on share from partners are brand Can current with moving And So you just how into in color pipelines? collaboration we be our brand acquisition XXXX? the wondering, us. would our brand some the What terminated helpful. brand partners quarter? new how many strategy you. Any

Arthur Yu

Okay.

so portfolio. not the number Double brand our contribution XX. And partner terms the brand to value our not we and perspective. will can new app, sustainable can our brand full to the business. a is a and adding because brand the only talk is for year partner how from to profitable which just Tmall historically create open want only that's to From speaking it's secondly, six XX And new a growth those help Baozun bad we the actually partners grow brand -- the of how quarter their contribute will add looking maybe added in actually we We're I partner, a proposition quarter sales, the perspective, for it's partner. about after good partners partners, to can four. And which additions -- of of for i.e. had our a lot the quarter principle where, is terms how in we four So brand only

cost are where extremely win a on company We in order focus the not business. to low

value proposition. overall optimize our portfolio, case, the it, if this strategy the the partner not our But will we with -- effort. of we on strategic brand in is So will selecting do partner's kind our meeting

growth. our try to try to We as And as keep serve brand many partner will as possible. overall

Feitong Zhang

helpful. Very Thanks. Okay.

Arthur Yu

you. Thank Okay.

Operator

you. Thank

call As to back there Over you. the like are to hand questions, would Wendy. no I further to

Wendy Sun

would Thank you, management Operator. in you thank like Baozun In closing, the we on team, for your of call. all today's behalf participation to

us. any call. you Thank information, If the require joining free today. further out for us This feel reach you to to concludes

Operator

Thank today. you. Thank conference participating. gentlemen, conclude for does your Ladies and that you for

all disconnect now. may you. You Thank

Baozun (BZUN) 4 Mar 212020 Q4 Earnings call transcript